Refinance Your Home

One of the most commonly asked questions by homeowners has to do with refinancing their home in Utah.  While the answers to this question might seem at times to be obvious, there is often a little more to evaluating the numbers than to simply go with a rule of thumb buzz that may be floating out there.  Utah mortgage refinance advertisements tout no cost mortgage refinances as the best thing since sliced bread, or focus entirely on interest rate without discussing the closing costs and possible buy down points. 

So how do you determine if a refinance is good for you?

Regardless of claims made via advertisements or any other medium, a no cost mortgage refinance may be your most expensive option.  The reason for this is that you always pay a higher interest rate in exchange for not paying closing costs.  Some mortgage companies push the no cost refinance because the advertisement is easy to explain.  In the background however is a slew of numbers that are crunched to make these loans work.  Basically speaking, mortgage companies are paid by the lender- even if that lender is itself- based on the interest rate charged.  The higher the rate, the more the lender is paid in yield spread and service release premiums.  Some lenders take that added money and use it to cover your closing costs.  As a result, these mortgages are good for short term mortgages.  If you plan on moving inside a year or two it may be an excellent option.  If you plan on staying more than 2-3 years you will usually pay more in interest on these loans than you would have paid in closing costs on a regular Utah mortgage refinance.